Are You Ready for Barcodes? Everything You Need to Know to Decide (And Where to Buy!)
Now that we've talked about common cosmetic labeling mistakes in regards to regulations, let's dive into some other packaging and labeling areas: bar codes!
The full-time job I quit to start Amathia Soapworks was an inventory management & vendor liaison position in the grocery industry, which gave me a leg up in the world of product-based business from a lot of different angles.
I absolutely adored the inventory management part of my job, and am a bit of a geek about UPCs (if you want to geek out, too, head over to George Laurer's website - he invented the dang things!)
You probably don't care to learn about all the interesting tidbits of barcodes and their invention, but you do probably want to know if you need them for your bath and body products, right?!
Before I answer that question, I reached out to other entrepreneurs I know and asked them if they have barcodes for their products, and why or why not?
Here's what they had to say:
So far I haven't gotten them simply because I've been pitching only small boutiques that don't require them. I know it is coming, though--maybe next year. - Stacia Guzzo, Handcrafted Honey Bee
Mine is a hybrid story - a bit of all. I registered with GS-1 and bought 100. The wholesale customers I have who need UPC codes are satisfied and I did not have to buy the 2000+ different skus I actually needed. Then... to sell to Amazon, I bought the cheap ones from a vendor on eBay, as it did not matter to me if they are registered or not for Amazon. - Kathy Dannel Vitcak, The Blissful Dog
I sell most of my wholesale to companies that do not use or require bar codes. I purchased bar codes for my entry into Whole Foods and that fell through due to outrageous insurance requirements. So, I just muddle along without that bit of technology. I have never lost an account because I do not have bar codes. Besides - it's expensive. - Deb Jasien, Fields of Ambrosia
I have them. I got barcodes specifically to be in a local natural market in my neighborhood. They ended up not placing a reorder but now that I have them, it makes approaching other retailers easier. Recently, we were just accepted by Whole Foods without much fuss. - Maia Roberts Singletary, Astrida Naturals
My story is similar to Maia's - I got them to wholesale to a couple of local stores. The GS1 fees aren't terrible for 100 codes, and it's nice to have that 'professonal' touch. It also made for a painless application and acceptance when I wanted to sell on Amazon. Whole Foods is my next goal - once I get over being scared! - Shawna Hearnes Mehaffy, New Leaf Naturals
I use barcodes for all of my products. They allow me to track inventory on my website and are also helpful for those wholesale distributors who may have a physical storefront. Using fulfilment services requires some method of tracking and upc codes as skus makes sense. Even my small local accounts have said they prefer having the code there because it makes their inventory tracking easier. - Amanda Stott, Tiki Bar Soaps
As we started to build our wholesale side of the business we realized that most stores require them. Even the stores we were in before we had barcodes that didn't require them were quite happy after we got them because it made things easier. It's important to do before you start planning on wholesaling products because stores take you more seriously. We've paid for the initial 100 barcodes so I'm cautious about not having too many scents or sizes. - Cindy Jones, Colorado Aromatics
So, let's sum that up and add in a few clarifications.
You should snag barcodes for your products if:
- You want to track your inventory seamlessly across your website, fulfillment programs, and/or inventory tracking software. (Yes, you CAN use barcodes in-house!)
- You want to sell to stockists who use inventory management software and electronic point-of-sale systems (cash registers) - usually, larger retailers. (Side note: inventory mangement software and digital POS systems are becoming more approachable and cost-effective, so smaller retailers are snagging them, too!)
- You want to use fulfillment services (like Amazon), work with distributors, or other third party operations that will handle your product.
You probably don't need to worry about barcodes too much if:
- You don't plan on wholesaling or using distributors, fulfillment services, or other third party operations to help sell, manage, or store your products.
- You can already manage your inventory in-house personally without barcodes.
Alright, fabulous - now we know if you need barcodes, right? Let's talk a bit more about barcodes...
What is a UPC and how does it work?
First, let's talk about the parts of a barcode. The barcodes you are likely familiar with and are needing for your products are UPC-A barcodes. They look like the image to the right.
(Side note: did you know that QR codes are a type of barcode? And that the USPS has used two different types of barcodes, Postnet and MaxiCode, to sort mail?)
Each UPC-A barcode contains a couple identifiers that help determine who sells the product (Company Prefix, the first six to nine digits) and what the product is (Item Reference Number, the remaining numbers following the Company Prefix, not including the check digit.) The last number is a check digit, which helps the computer read the barcode properly if another part of the barcode is read incorrectly.
For example, this barcode is from a Pepsi 12 pack (yes, I do still have most of Pepsi and Coca-Cola's UPC numbers memorized from scanning deliveries, entering sales into the system, and the like. Ha.)
012000 is the Company Prefix, and it is registered by Pepsi-Cola North America, Inc.
80994 is the Item Reference Number, and it is assigned to Pepsi Cola 12 pack cans.
1 is the check digit
Despite the fact that barcodes are used to relay information to computers when scanned, the information is not stored in the barcode itself. When a cash register scans a barcode, it is looking up the UPC number in the store's point-of-sale system and inventory management system (in some cases, it's one in the same!)
From there, the cash register can display the associated product name, price, size, or other information stored in the computer system. It makes it possible for computers to keep a lot of information about a product by using a single identifier number to pull up that information.
When you give a stockist a UPC for one of your products, they will enter your product into their system with their own name, price, description, and other information tied to your UPC.
That's why sometimes you'll notice funny product descriptions on receipts or signage, someone typed that information into the system when the product was added to the store's selection. One of my co-workers once accidentally shortened a product description from Assorted Salt Water Taffy to "SW TAFFY ASS." ;)
Where do you get barcodes?
GS1 US (formerly the Uniform Code Council) is a standards organization that establishes identification standards for various industries and assigns company prefixes as well as UPCs. They are the only source for tried and true UPC barcodes with official Company Prefixes.
If you've looked for barcodes for sale, you've probably noticed there are a lot of other websites selling barcodes, too. What's the deal with that?
In August of 2002, the UCC (now GS1) settled a court case for close to 4 million dollars, as they had changed their terms of service to disallow registered companies from reselling, sharing, leasing, or sub-dividing barcodes from a Company Prefix. Any company who received a Company Prefix prior to that date could continue to sub-divide their numbers.
While some resellers do have real GS1 barcodes from before August of 2002, they can never include a GS1 certificate (many have made up their own certificates which are NOT the same thing.) This is fine and all, except a huge number of retailers require official GS1 registered numbers.
As far as I'm aware, the following retailers require a vendor (you!) to provide a GS1 certificate: Walmart, Kroger, Home Depot, Sears, Lowe's, PetsMart, Whole Foods, Lord & Taylor, Best Buy, Nordstrom, Wegman's, CVS, True Value, Macy's, Kohl's, Sports Authority, JC Penney, Target, SuperValu, Dillards, Jo-Ann's, Micheael's, Sam's Club, Costco, Fred Meyer, and Bloomingdale's.
There very well could be many others, but these are all national (or global) companies who have made it a policy to require GS1 registered barcodes as part of their vendor acceptance process.
How many barcodes do I need?
Each product that you create needs it's own barcode. If you make ten varieties of lip balm, each variety should have it's own barcode. Where this starts to get crazy is when you make the same product in multiple sizes, as the unique products that need barcodes quickly adds up.
For example, let's say that you offer 4 varieties of soap. Each variety has two different size options: full size and half size bars. Here's your full product list:
- Lavender Soap, Full Size Bar
- Lavender Soap, Half Size Bar
- Goat's Milk Soap, Full Size Bar
- Goat's Milk Soap, Half Size Bar
- Citrus Soap, Full Size Bar
- Citrus Soap, Half Size Bar
- Cinnamon Soap, Full Size Bar
- Cinnamon Soap, Half Size Bar
That's eight products needing barcodes!
While a few smaller retailers are willing to work with you if you use a blanket barcode for a product that is the same price across the board (for example, all your full size bars have the same price and you use the same barcode), this won't fly with many retailers as it makes a mess of their inventory. They aren't able to keep track of each individual scents and sizes when they receive new product or sell any of their inventory (the computer can only read the barcode - it can't tell the difference between a purple soap and an orange soap!)
Alright, so let's get a rundown:
You probably do not need barcodes if you have no plans of selling to major retailers or working with any other third party service.
If you do need barcodes, you have two options: obtaining a Company Prefix from GS1 or purchasing individual UPC numbers from a reseller.
If you want to sell to national chains or have plans to grow your company beyond a small operation, you should probably go the official route. GS1 has recently changed their fee structure to make it more approachable for small businesses (initial registration sits at $250 for 1 to 10 individual UPCs, with an annual renewal of $50).
If you do not need official barcodes and plan to use them in-house or only plan to sell to small boutiques, you can likely get away with purchasing from a reseller. (George Laurer compiled a list of resellers he believes are selling subdivided numbers ethically.)
You will need a single UPC for each product variation you sell, which is yet another great reason to keep your product line slim.
Now, how about putting barcodes on packaging? We'll talk about that soon!
Do you have any other barcode or packaging questions you'd like to see answered in the series? Pipe up in the comments and let me know!
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